Mercedes Dealer Files for Bankruptcy Shield
Newport Beach-based Jim Slemons Imports, the nation’s eighth-largest auto dealer with $110.2 million in revenue last year, filed a Chapter 11 bankruptcy petition Friday as part of plan to stabilize its sagging finances while it seeks a buyer.
Malcolm McCassy, Slemons’ general manager, said Slemons is seeking at least $15 million for the Mercedes-Benz franchise and that there are “at least four written offers on the table that we are considering.”
The bankruptcy filing, which lists $17 million in assets and $22 million in liabilities for Slemons Imports, only involves the Mercedes-Benz dealership and none of the other dealerships or businesses owned by James B. Slemons, McCassy said.
The bankruptcy filing was accompanied by a guarantee of $3.5 million in new financing from the Mercedes-Benz dealership’s major creditor, Tokai Credit Corp. in Pasadena, which is owed $10.5 million.
The funds will enable Slemons Imports, which last year was the fourth-largest seller of new Mercedes in the country, to buy new and used cars for its shrunken inventory and to clear up its nagging problem with delayed payoffs on customer trade-ins, McCassy said.
The bankruptcy petition, he said, was the result of several weeks of negotiations with Tokai. “The incentive for the bank,” he said, “is to protect its assets and allow us to go forward and procure a buyer without undue financial pressure.”
Under the agreement with Tokai, Slemons remains in possession of the franchise and will continue operating with the same management team. Slemons’ financial woes began about three years ago when he lost $13 million in the bankruptcy of a small commuter airline in Santa Ana in which he’d invested heavily.
Slemons recently sold his Acura and Honda franchises and last year closed a Daihatsu dealership. He also owns a Volvo franchise in Hawaii, a Jeep-Eagle dealership in San Clemente and an auto leasing firm and a small custom-car sales office, both in Mission Viejo.
Slemons’ finances also have been strained by a lifestyle that includes ownership of an 83-foot motor yacht that requires a crew of two and the costs of maintaining three homes in Newport Beach, two in Hawaii and one each in Palm Springs, Big Bear and Catalina. He has also been divorced five times, and several of the settlements involved substantial cash and property, including a $4.5-million cash payment to his fifth wife.